Annual Report 2013

Consolidation and Integration

20

13

Annual Report

Contents

Industry Overview

56

Operational Review

58

Financial Review

68

Management Discussion

and Analysis

Community Development

104

Environment

106

Product Responsibility

106

12

14

16

Corporate Governance

Corporate Social

Responsibility

Financial Report

109

Annual Report Contents

Reference to the

Bapepam-LK Regulation

221

Company Proile

30

Brief History of the Company

32

Business Line

34

Business Strategy

35

Vision and Mission

36

Organisation Structure

38

Proiles of the Board

of Commissioners

40

Proiles of the Board of Directors Financial Highlights

Stock Highlights 2013 Event Highlights

17

Awards and Certiications

18

Report of the Chairman

22

Report of the

President Directors

27

Perspectives of the

Founding Shareholder

80

General Meeting of Shareholders

82

Board of Commissioners

84

Audit Committee

86

Board of Directors

88

Internal Audit

90

Corporate Secretary

Consolidation and Integration

“

Coal continues to feel the pressure of a weak market price. Far from

_“

experiencing a recovery from a prolonged price depression, the

monthly average benchmark price of Newcastle Index declined from

US$96.9 per ton in 2012 to US$85.3 per ton in 2013.

Without doubt, coal producers are forced to work in the most effective

and efficient manner to cope with the challenging conditions that still

prevailed throughout 2013. Only those who are strong – strong in the

sense of being efficient and cost-effective in terms of operations – and

can still enjoy a healthy operating margin. Not exceptional, but healthy.

Keenly aware of this, Toba Bara exerted all efforts to make its coal

mining operations one of the most cost-effective in the sector. To that

end, the Company consolidated its strengths – human resources,

work process, marketing strategy and social responsibility – and

integrated the infrastructures of its three subsidiary coalmine entities.

With its consolidation and integration steps, Toba Bara came through

the year 201

3 with lying colours.

Full-scale Integration

1

Toba Bara beneits from the locations of its three subsidiary coalmine entities that are adjacent to one another. This enables the Company to plan, build and operate mining infrastructures in an integrated and synergistic manner. Imagine the immense beneits that can be derived from a coal-hauling road, which is not only shared but can be used to transport coal; shorten the distance to store away overburden; and enabling the three mining entities to also share the use of other coal producing facilities – coal crusher, stockpile yard, conveyor belt – simply because they are connected to one another through the haul road.

Cost Eficiency

2

With the integrated mining infrastructures, Toba Bara beneits from the economies of scale of its mining operations that are relected in the decreasing operating costs of the three mining companies.

The outcome of this has been a signiicant amount of savings in both production and operating costs, which is even more signiicant in light of the depressed coal market in recent years.

In the eyes of Toba Bara, nothing is more important than cost efficiency in the current state of the coal industry. Toba Bara was able to achieve this through the strategy of consolidation and integration that it has pursued since 2013.

Increasing Productivity

3

With increasing integration of the mining infrastructures and facilities among its three mining entities, Toba Bara has been able to increase coal production volume, achieve better and more efficient working processes in the ields, and meet higher productivity.

In 2011, the Toba Bara Group produced a total of 5.2 million tons of coal. In 2012, this was increased to 5.6 million tons. And in 2013, production volume increased even further to 6.5 million tons.

The Company has not harnessed all of its resources to date, and therefore still has room for improvement, enhancement and perfection to increase its productivity even more in the years to come.

Quality Human Resources

4

Despite the Company’s efficiency drive, the number of employees increased. This shows the importance that Toba Bara has always placed in the roles that human resources play behind the business efforts of the Company, which has to sustained its growth, amid the challenges and uncertainties of the commodities market in recent years.

An in-depth expertise on the natural resources industry itself – whether it be in the mining or plantation

industries – is key to the successful pursuit of achieving that sustainable development.

With a growing number of employees totalling 795 people as of year-end 2013, the personnel of the Toba Bara Group have a median age of below 35 years. Whereas the largest group of employees are within the age range of 26 to 45 years old, generally the most productive years of any working person.

As a result of which, the Company is set to face up to the challenges of the commodities markets in the future, forging ahead to become one of the leading players in the natural resources industry in Indonesia for decades to come.

Sustainable Social

Responsibility

5

Corporate Social Responsibility constitutes one of the success factors of any mining or plantation operations, in view of the fact that these two business activities are intensely intertwined with the people or communities in the surrounding areas where the business operates. In recognition of this, Toba Bara through its three subsidiary entities places a strong emphasis on

corporate social responsibility as a key initiative to foster harmonious relations with the surrounding communities. A number of corporate social responsibility programs have been undertaken by taking into consideration the primary needs of the surrounding communities, in addition to emphasizing activities that enhance community welfare such as through social and economic empowerment programs in education, health and decent livelihoods.

Financial Highlights

2011 2012 2013

Sales 498,190,177 396,685,875 421,849,737

Gross Proit 190,202,268 48,150,372 79,552,405

Operating Proit 156,532,532 21,083,331 50,015,314

Proit for the Year Attributable to:

Equity Holders of the Parent Entity 57,716,891 3,198,832 18,543,538

Non-Controlling Interest 57,572,552 8,733,850 16,060,255

Total Proit for the Year 115,289,443 11,932,682 34,603,793

Total Comprehensive Income Attributable to:

Equity Holders of the Parent Entity 57,639,973 3,269,250 19,919,574

Non-Controlling Interest 57,504,921 8,733,850 16,213,148

Total Comprehensive Income 115,144,894 12,003,100 36,132,722

Basic Earnings per Share 427.5325 0.0032 0.0092

Current Assets 110,747,014 106,512,473 130,198,784

Non-Current Assets 114,499,071 155,014,027 181,449,155

Total Assets 225,246,085 261,526,500 311,647,939

Current Liabilities 122,782,483 140,537,280 145,451,672

Non-Current Liabilities 43,340,683 10,044,913 35,715,023

Total Liabilities 166,123,166 150,582,193 181,166,695

Total Equity 59,122,919 110,944,307 130,481,244

Total Liabilities and Equity 225,246,085 261,526,500 311,647,939

Gross Proit Margin 38% 12% 19%

Operating Proit Margin 31% 5% 12%

Comprehensive Income for the Year Margin 23% 3% 9%

Return on Assets 0.5 0.0 0.1

Return on Equity 1.9 0.1 0.3

Current Ratio 0.9 0.8 0.9

Total Liabilities to Total Equity 2.8 1.4 1.4

Total Liabilities to Total Assets 0.7 0.6 0.6

Production Volume (in millions of tons) 5.2 5.6 6.5

Overburden (x) 12.7 14.9 13.4

Sales Volume (in millions of tons) 5.5 5.5 6.3

Production Volume (in million tons)

(in US$)

Total Assets (in million US$)

19.2%

225.2

261.5

311.6

2011

2012

2013

Total Liabilities (in million US$)

166.1

150.6

181.2

2011

2012

2013

Total Equity (in million US$)

59.1

110.9

130.5

Sales (in million US$)

498.2

396.7

421.8

2011

2012

2013

Operating Proit (in million US$)

156.5

21.1

50.0

2011

2012

2013

Total Comprehensive Income (in million US$)

115.1

12.0

36.1

20.3%

137.0%

200.8%

17.7%

6.3%

2012-2013

2012-2013

2012-2013

2012-2013

2012-2013

Stock Highlights

Share Performance 2013

5,000,000 200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0 0

10,000,000 400

15,000,000 600

20,000,000 800

25,000,000 1,000

Share Price Volume

Quarter 3 Quarter 4

Highest Price (in Rp) 2,200 1,480

Lowest Price (in Rp) 1,350 1,060

Closing Price (in Rp) 1,460 1,270

Transaction Volume* (Unit) 59,628,000 2,382,000

Transaction Value* (in Rp) 118,443,462,320 3,123,300,000

Share Performance 2012

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Highest Price (in Rp) 1,330 920 860 810

Lowest Price (in Rp) 770 720 680 630

Closing Price (in Rp) 880 860 710 740

Transaction Volume* (Unit) 148,771,500 17,548,000 7,246,000 9,487,500

Transaction Value* (in Rp) 149,293,019,320 20,770,194,968 5,073,634,976 6,436,890,000

Share Performance 2013

Dividend Policy

Based on Indonesian law, decision on dividend is made by shareholders through the General Meeting of Shareholders on the recommendation of the Board of Directors. The Company can announce the distribution of dividend annually if it has positive results. Prior to the closing of a inancial year, interim dividend can be distributed, provided it is based on the Company’s Articles of Association, and if the distribution of such interim dividend does not result in the Company’s net assets to fall below the amount of fully subscribed and paid-in capital, and furthermore, the Company still meets the requirement for statutory reserves pursuant to the Limited Liability Company Law on compulsory reserve. The distribution of interim dividend is determined by the Board of Directors post securing approval from the Board of Commissioners.

The Company plans to pay cash dividend at least once a year. The amount of dividend is related to the proit of the Company for the inancial year, mindful of the inancial condition of the Company, and without exempting the rights of the General Meeting of Shareholders of the Company to decide otherwise

The Company aims to pay dividends in the amount of at least 30% of its consolidated proit for the year (less minority interests and other comprehensive income) since inancial year 2012, while observing the compulsory reserve requirements pursuant to the Limited Liability Company Law. The amount of dividends to be distributed by the Company will depend on available cash low, investment plans, liquidity condition, future business prospects and other factors that are deemed relevant by the Board of Directors and restrictions on the payment of dividends based on certain agreements.

The shareholders on the prevailing listing date have rights to certain full dividend that has been approved, subject to prevailing income tax law in Indonesia. Dividend payable to a shareholder of foreign national is subject to income tax of maximum 20% in Indonesia.

Dividends Payment

Information on dividends payment is presented in the Corporate Governance section on page 80 of this Annual * Cummulative Value

Market capitalisation as of 28 December 2012 amounted to Rp2,556 billion.

Market capitalisation as of 31 December 2013 amounted to Rp1,489 billion. * Cummulative Value

2013 Event Highlights

The Company presented its results of operations as of September 2013 in the Public Expose event at the Indonesia Stock Exchange Building, covering both inancial and operating results. Pandu Syahrir (Director of Finance) and Sudharmono Saragih (Director of Operations) gave the

Public Expose / 18 December 2013 10 millions No Loss Time Injury Award -

Petrosea / 11 November 2013

Presentation of the certiicate and award from the Company to PT Petrosea Tbk as the mining contractor in ABN on the achievement of safety at work of 10 million man-hours without an accident.

The Company (represented by Pandu Syahrir) was a speaker at the Indonesia Commodities Conference organised by Macquarie Securities, in Jakarta. Pandu Syahrir had the opportunity to speak in the session of “Outlook and Challenges for Indonesia’s Coal Industry.”

Indonesia Commodities Conference / 25 September 2013

The Company convened the Annual General Meeting of Shareholders for the irst time as a publicly listed company.

General Meeting of Shareholders / 28 June 2013

To increase awareness for the Company, Toba Bara participated in Coal Trans 2013 by opening a booth and becoming a sponsor of the event that was held in Nusa Dua, Bali.

Coal Trans Asia / 2 – 5 June 2013

Forbes Indonesia magazine designates PT Toba Bara Sejahtra Tbk as one of “Indonesia’s Top 50 Companies.”

Award from Forbes Magazine / 25 November 2013

Awards and Certiications

PT Adimitra Baratama Nusantara received an award for achieving Zero Accident between the period of 1 January 2009 and 20 October 2013 from the Governor of East Kalimantan on 17 February 2014.

PT Adimitra Baratama Nusantara received a Gold Award Certiicate as a token of Partnership and Appreciation from the Regency Government of Kutai Kartanegara in 2013.

PT Adimitra Baratama Nusantara received a Green Rating Certiicate in the rating evaluation program on the performances of companies in environmental management, from the Governor of East Kalimantan on 5 June 2013.

PT Toba Bara Sejahtra Tbk received the Certiicate of Participation in the Indonesia Environmental Week 2013, presented by the Ministry of Environment of the Republic of Indonesia on 2 June 2013. PT Adimitra Baratama Nusantara

received an award for achieving Zero Accident from the period of 1 January 2009 through to 20 November 2012 from the Governor of East Kalimantan on 12 February 2013.

Report of the Chairman

Jusman S. Djamal

President Commissioner

It gives me great pleasure to present the highlights of the achievements of PT Toba Bara Sejahtra Tbk for iscal year 2013. This report also presents the assessment of the Board of Commissioners on the performance of the Company under the management

mining industry in general – including that of coal – faced even greater challenges in 2013 than they did in the previous year.

A number of factors such as the global price of coal that had not fully recovered,

Dear Distinguished Shareholders,

“

“

As a result of these

efficiency measures,

the Company was

able to increase its

proitability returns

Under those rather unfavourable conditions, the development of the Indonesian economy was also not very encouraging. Indonesia’s GDP growth declined from 6.2% in 2012 to 5.8% in 2013. Several other key indicators also relected similar discouraging developments, among which were the weakening of the Rupiah that depreciated by 26% throughout the year, the benchmark interest rate of Bank Indonesia that rose from 5.75% to 7.5% by year-end 2013, and inlation rate that increased from 4.3% in 2012 to 8.4% in 2013.

Although still within the safe corridor, Indonesia has begun to feel the external effects that are potentially harmful to the delicate balance of its macro-economy. For example, the suspension of the quantitative easing policy of the US Federal Reserve Bank resulted in capital light from Indonesia that instantly brought down the exchange rate value of the Rupiah. Indonesia’s external balance of payment suffered due to a weakening of exports relative to imports that had prevailed throughout 2013. At the same time, Indonesia also experienced current account deicits that continued to rise over the years, among other things due to the cost of subsidies on fuel, electricity and other utilities that are still borne by the government.

Obviously we hope that those

unfavourable conditions will soon change for the better in 2014 and beyond.

Assessing the Performance of the BOD

Against the backdrop of numerous challenges in 2013, PT Toba Bara Sejahtra Tbk posted quite an

In our opinion, the Board of Directors was able to execute the budget and work plan of the Company for the inancial year 2013, as mandated by the shareholders and guided by the Board of Commissioners.

By implementing the right production strategy, the Company was able to increase its production volume by 16.1% to 6.5 million tons of coal in 2013. At the same time, the Company was also able to undertake tight cost efficiency measures without compromising the safety and security of its operations. As a result of these efficiency measures, the Company was able to increase its proitability returns encouragingly.

The Company posted a total comprehensive income for the year of US$36.1 million on total net revenues of US$421.8 million in 2013, an increase of 200.8% and 6.3%, respectively, of those of 2012.

Integration of Infrastructure Enhances Competitiveness

There is no denying that the nature of the coal commodity market, that has suffered from the depressed coal prices in recent years, has somewhat shifted the focus on what constitute a successful coal mining operations. It used to be that production volume was the primary measure of success for any coal mine operations. This is no longer true. Today, to be a coal mining company that is able to produce coal at a lower or more efficient operating cost compared to that of any other coal mining company is a must, especially when seen in the context of achieving sustainable growth and proitability.

Coal Production Volume (in million tons)

16.1%

5.6

6.5

2012

2013

Report of the Chairman

To that end, Toba Bara enjoys a unique advantage compared to its peers. Through its three operating subsidiaries, the Company owns three coal mine concession areas that are adjacent to one another. This allows for the sharing of mining infrastructure in an integrated manner. In 2013, the Company’s Management focused their attention and exerted all efforts to enhance that integration even further. This enables the Company to suppress the operating costs of its mines efficiently and effectively. In turn, the cost efficiency has increased Toba Bara’s competitiveness, while also maintaining sound proitability.

That is why the theme of our 2013 Annual Report,

“Consolidation and Integration,” aptly describes the efforts of the Company not only to prevail over the competition in the market, but also to ensure the Company’s sustainable long-term growth.

Implementing Corporate Governance that Continues to be Enhanced

The Board of Commissioners continues to carry out its supervisory roles with the help of the committee under its control, namely the Audit Committee. The establishment of this committee is part of implementing Good Corporate Governance (GCG) that continues to be enhanced by the Company.

The Board of Commissioners welcomes the initiatives that have been and will continue to be taken by the Company with respect to developing or implementing the policies of GCG within the Company in line with international best practices such as the Recommendation of the OECD (Organisation for Economic Co-operation and Development), the ASEAN Scorecard, the Guidelines of the National Committee on GCG, prevailing laws and regulations, and the Articles of Association of the Company.

One of the Company’s strengths in corporate governance is that all of the members of the Board of Commissioners of PT Toba Bara Sejahtra Tbk are not affiliated with the majority shareholder of the Company.

This means that the level of independence of the Board of Commissioners of the Company is 100%, well above the mandatory requirement of the Capital Market Authority of more than 30% of the board membership.

In 2013, with the help of the Audit Committee, the Board of Commissioners continued to monitor the execution of risk management policies, implementation of internal audit, and compliance to prevailing laws and regulations, including the Company’s standard operating procedures. I am pleased that, based on audit indings and other internal controls, there were no indications of frauds or other activities that fall outside of prevailing rules and regulations.

The Board of Commissioners has reviewed the audited consolidated inancial statements of the Company for the year ending 31 December 2013 and is of the opinion that the Company has achieved most of its targets for the year. The Board of Commissioners duly submits said inancial statements for the approval of shareholders at the Annual General Meeting of Shareholders of the Company in 2014. Human Resources and Social Responsibility The Board of Commissioners also monitors as a matter of course the company’s activities in the areas of Human Resources (HR) and Corporate Social Responsibility (CSR). In 2013, Toba Bara continued to place an emphasis on employee welfare, training and HR development, as well as meeting the collective aspiration of the communities in which the Company and its subsidiary entities operate. As in previous years, Toba Bara directed its CSR activities in a planned and systematic manner towards long-term objectives that comprised of among other things empowering the economies of local villages, improving the quality of education, providing community health care services, including supporting healthy nutrition for babies, and alleviating poverty in general.

Report of the Chairman

Following up on past successes in environmental management prior to 2013, two of the Company’s subsidiary entities, namely ABN and IM, received a Green rating and Blue rating, respectively, in managing environmental conservation through PROPER, a government sanctioned environmental management program. In 2013, TMU also entered the PROPER program for the irst time. In the discussion on CSR in its own section of this Annual Report, the Company has also begun to report activities related to three aspects of corporate sustainability – namely (i) environmental management, (ii) community development and (iii) product responsibility.

Board of Commissioners Composition

I am pleased to report that there has not been any change to the composition of the Board of Commissioners of PT Toba Bara Sejahtra Tbk since the last Annual GMS of the Company.

As such, I continue to share my duties and responsibilities with my distinguished colleagues, Messrs. Bacelius Ruru and Farid Harianto, two highly accomplished professionals in government, business, the capital market and academia.

Future Expectations

The Board of Commissioners views that the steps taken by Toba Bara to consolidate and integrate its resources in these extremely challenging times for the coal industry, constitute the right approach with strategic implications for the continuity and sustainable growth of the Company going forward.

With their numerous infrastructures and resources, the three subsidiary entities of Toba Bara were able to harness the synergy needed to enhance their competitiveness as well as the growing value that their businesses create.

In the long run, the synergy will have a signiicant impact on the Company’s resilience and growth capacities. This was already evident in 2013, when amid the challenging conditions that had driven most coal mining companies in Indonesia to post lower results of operations than they did a year ago, the Company had in fact posted higher operating results.

We are therefore highly conident of the Company’s ability to sustain its growth in 2014 and beyond. Closing Remarks

It goes without saying that the success of Toba Bara could not have been achieved without the support and trust of a great many stakeholders.

We are eternally grateful and appreciative of the Company’s shareholders, customers, employees, business partners, the central and regional governments, the people’s representatives and the communities in which the Company operates.

Report of the President Director

Justarina S. M. Naiborhu

President Director

“

“

The year 2013 went by so quickly. The price of coal that had been depressed throughout 2012, had not fully recovered in 2013.

This condition forced Toba Bara, through its three subsidiary entities that are

conditions, among the key initiatives of which were efforts to Consolidate and Integrate. Our consolidation efforts centred on human resources as well as on work processes and cost efficiencies; whereas our integration efforts were aimed at the mining infrastructures and

Our consolidation efforts

centered on human resources

as well as on work processes

and cost efficiencies; whereas

our integration efforts

were aimed at the mining

infrastructures and other

mining resources among the

three subsidiary entities of the

Company.

However, allow me to present some of the results of our Consolidation and Integration initiatives that are quite encouraging.

Amid a coal market background that has not been conducive, I am pleased to report the Company’s results of operations that are promising. Toba Bara posted total sales revenue that increased by 6.3% to US$421.8 million in 2013. The increase was derived primarily from the increase in sales volume by 14.5% to 6.3 million tons of coal compared to that of the previous year. The Company also posted an encouraging growth in terms of comprehensive net income, amounting to US$36.1 million in 2013 compared to US$12.0 million a year before. The Company successfully achieved all of its key business targets as set forth in the Company’s budget and work plan of 2013.

The encouraging growth delta between the operating results of 2013 and those of 2012, however, was not as high as the growth delta between the years 2012 and 2011. This prompted the Company to continue to consolidate and manage cost more efficiently, in addition to the aforementioned integration efforts. Cost efficiencies were achieved in almost every aspect of production, starting from mining operating cost, barging and fuel consumption to employing infrastructures on integrated basis.

In the meantime, a reduction of the stripping ratio, shortening the distance to stow away overburden, and border mining activities – all contributed to further cost savings.

These cost-efficiency initiatives

succeeded in maintaining the Company’s operating margin at a healthy level, thus contributing positively to the Company’s operating income as well as net income for the year under review.

Work Transformation Process One of the key factors behind the Company’s achievements in 2013 was the efforts to transform the way the Company works that include reorganising, appointing the right people in key operating positions, and instilling the same understanding among all personnel of the three subsidiary entities towards the business goals and objectives of the Company. These transformation efforts had a signiicant impact on better operating efficiencies, cost and time efficiencies, and more importantly, on the formation of a stronger camaraderie and teamwork spirit between the personnel of Toba Bara and the three subsidiary entities. Several concrete results that have been gained from this work transformation process, among which are the 2013 record-breaking fourth-quarter production volume that reached a total of 1.9 million tons of coal, the highest ever quarterly production by the Company, the construction of the new hauling road from TMU to IM via ABN that was completed ahead of schedule, in addition to the aforementioned cost efficiencies. Sales

(in million US$)

6.3%

396.7

421.8

2012

2013

Report of the President Director

Initiatives Carried Out by the Company

The Company made a total of US$23.3 million in capital expenditure in 2013 to support its operating activities and improve work efficiencies. One of the realised capital expenditure was for the construction of a Coal Processing Plant (CPP) at IM that can increase the coal crushing capacity of Toba Bara from 13 Mmt to 16 Mmt.

The increase in infrastructure capacities in 2013, as referred to above, is complemented by a number of initiatives undertaken in the area of marketing with the aim of securing the Company’s market share. Those initiatives include closing the deal on long-term coal sales contract at a locked price, expanding the marketing coverage area in response to the uncertain coal market conditions, and efforts to increase the number of end-user customers to balance the number of trading companies that the Company could rely upon. At the same time, the Company also enhanced its corporate communications and investor relations as a way to build a positive image around the brand Toba Bara. A number of initiatives taken by the Company’s Investor Relations Division have yielded positive results, including greater recognitions in the market from the various exposures of Toba Bara in leading media such as Forbes magazine, or the coverage of Toba Bara by market analysts from leading irms such as Macquarie, and the participation of Toba Bara in the Coal Trans Asia 2013 as one of the main sponsors as well as exhibitor in the trade fair. In addition, Toba Bara was also invited to speak in various prominent industry events such as Kalimantan Coal, Indonesia Power & Energy Summit, Macquarie Indonesia Commodities Conference, Seminar organised by the Directorate General of Taxation and others.

In this context, Toba Bara also participated actively as the Team Chair and Speaker in the dialogue forum between the Government and the Indonesian Coal Mine Association to ind the middle ground in the Indonesian Government’s plan to raise the royalty rate of coal production.

Corporate Governance

The Board of Directors continued to implement good corporate governance (GCG) policies as mandated by the General Meeting of Shareholders and capital market regulations with respect to publicly listed companies.

In 2013, the Audit Committee of the Company had fully served its functions pursuant to the duties and responsibilities as set forth in the Audit Committee Charter. The Report of the Audit Committee for the year ending 31 December 2013 is presented in this Annual Report starting from page 84.

Meanwhile, the Board of Commissioners has begun to discuss the establishment of the Nomination and Remuneration Committee and the Risk Management Oversight Committee to assist the oversight duties of the Board of Commissioners in overseeing the management of the Company by the Board of Directors.

The Board of Directors continue to ensure that the principles of GCG comprising transparency, accountability, responsibility, independence, and fairness are constantly upheld by each and every person in the Company and the three subsidiary entities.

Report of the President Director

In addition, the Corporate Secretary Division and Legal Division are seeing to it that the Company with all of its rank-and-ile comply fully with all prevailing laws and regulations that are relevant to the Company’s business.

The Company also continues to enhance corporate social responsibility activities, especially those that relate to the Company’s sustainable business development and growth. Slowly but surely, Toba Bara has begun to implement the principles of sustainable development that are grounded upon the 3Ps of Proit, People and Planet. Discussions on these three “P” that are presented in the context of (i) environmental management, (ii) community development, and (iii) product responsibility are presented in the Sustainability Program section in the discussion on Corporate Governance in this Annual Report starting from page 78.

Human Resources

The management of human resources (HR) has become an increasingly important part of the Company’s activities due to the business process transformation undertaken since 2013 in response to the currently bearish coal market. We then made a workforce mapping exercise, along with the gap analysis between the job requirement at hand and the Company’s available HR capabilities. The outcome of this mapping and analysis is then used as the basis to develop the HR development policies and the recruitment of employees to strengthen the rank-and-ile of the Company and its subsidiary entities.

The Principles of Sustainable Development that are Grounded Upon the 3Ps

Report of the President Director

Justarina S. M. Naiborhu

President Director

Prospects in 2014

The Company believes that conditions in the coal market will generally not change much in 2014 compared to those of the previous year, although there has been an upward trend in the price of coal since the fourth quarter of 2013. We will still have to see whether this upward trend relects market fundamentals over the long term or simply a temporary spike in demand related to the winter season in the northern hemisphere of the globe. But whatever the trending price will be in 2014, the Company is ready to face up to any challenge that the market may pose.

Toba Bara has a long-term business plan that centres around (i) efforts to increase the exploitation of coal from current coal reserves of 147 million tons, (ii) efforts to increase production and operating cost efficiencies through various initiatives that have proven to work, (iii) efforts to expand markets and the number of end-user customers in order to increase market share, and (iv) efforts to explore for more coal reserves throughout the Company’s vast concession areas that are still not prospected, as well as through acquisitions when the opportunity arises.

Based on those efforts, the Company believes that it can maintain sustainable growth in 2014 and in the years to come.

Board of Directors Composition

In 2013, there was no change in the composition of the Board of Directors.

Closing Statements

In closing, allow me on behalf of the Board of Directors to convey our heartfelt appreciation to shareholders, members of the Board of Commissioners and its committee, customers, employees, business partners, the central and regional governments as well as the people’s representatives, and the communities surrounding the Company’s operations. We value their support and trust towards Toba Bara. May God bless our efforts in the future.

Gen. (Ret.) Luhut B. Pandjaitan

Founding Shareholder

Gen. (Ret.) Luhut B. Pandjaitan is the founder of PT Toba Sejahtra that holds 71.8% shares of PT Toba Bara Sejahtra Tbk.

A retired general of the Indonesian National Army (TNI), statesman, former ambassador extraordinary and

plenipotentiary of the Republic of Indonesia, businessman and philanthropist, Luhut B. Pandjaitan devotes all his thoughts and efforts to the progress and prosperity of the Indonesian nation that he loves.

As a businessman, his vision is to increase the

competitiveness of Indonesian businesses in order to compete regionally and globally.

Regionally, the demand for increased competitiveness by Indonesia is already upon us with the inauguration of the ASEAN Free Trade Market in 2015. Whereas globally, Indonesia must improve its industrial strength among the

Luhut B. Pandjaitan believes that education is key to increasing the competitiveness of a nation. Therefore, he founded the DEL Foundation, a non-proit foundation that is actively engaged in community development in North Sumatra with a focus on education through PI DEL. A leading national university in the ield of information technology that is accredited by the Ministry of Education of the Republic of Indonesia.

He believes that Indonesia needs to add the value that can be derived from the nation’s natural resource riches. Therefore, he founded Toba Bara to create added value from the coal-mining sector – a leading sector of Indonesia’s.

“The Social Entrepreneur of the Year” of Ernst & Young Global Entrepreneurship Award 2012, Luhut B. Pandjaitan, is keenly aware of the signiicance of the sustainable development that is built upon the three pillars of economic performance (proit), environmental conservation (planet) and social welfare (people). Therefore, he expects Toba Bara to begin harnessing

Perspectives of the Founding Shareholder

“

“

I am pleased that the

Toba Bara Group has

begun to show the

strength and features

of a sustainable

business.

Company Proile

Brief History of the Company

30

48

Shareholders Information

Capital Market Supporting Professionals

52

Address of Company and Operating Subsidiaries

53

Brief Description of Operating Subsidiaries

50

Business Line

32

Business Strategy

34

Vision and Mission

35

Organisation Structure

36

Proiles of the Board of Commissioners

38

Proiles of the Board of Directors

40

Human Resources

42

Brief History of the Company

PT Toba Bara Sejahtra Tbk (Toba Bara) was incorporated in 2007 and acquired its legal entity status based on the approval of the Minister of Justice and Human Rights of the Republic of Indonesia number AHU-04084.AH.01.01 dated 28 January 2008. Toba Bara is structured as a holding company and, through its subsidiary entities, operates three coal mines.

The Company is the holding company of PT Adimitra Baratama Nusantara (ABN), PT Indomining (IM) through PT Toba Bumi Energi (TBE) and PT Trisensa Mineral Utama (TMU), as well as PT Perkebunan Kaltim Utama I (PKU) that was acquired in June 2013. The following timeline describes the major events that have transpired in the Company’s corporate history:

ABN and TMU were incorporated in

2004.

2004

IM was incorporated in 2005.

2005

ABN and IM were granted mining authorization for

exploration.

2006

ABN and IM were granted KP for

exploitation.

2007

IM began production.

ABN began production.

2008

TMU was granted KP for exploration.

ABN converted its KP to IUPOP.

2009

TMU began production. Consolidated production of Toba

Bara surpassed 5 million tons.

2011

The haul road TMU – IM is operated ahead of schedule. Construction of the second underpass

in ABN was completed.

2013

IM and TMU converted their KP

to IUPOP.

2010

TBS acquired 51.0% of ABN, 52.5% of TBE

(that controlled IM) and 51.0% of TMU.

Toba Bara acquired additional shares of TBE and TMU to

99.99% each.

2012

TBS listed its shares on the Indonesia

Stock Exchange (July).

TBS settled the land

TMU is poised to increase coal production to 80,000 tons – 100,000 tons/ month. A new CPP has been constructed in IM.

Company Proile •Brief History of the Company

Business Line

TMU

ABN

ABN Jetty IM Jetty

~5 km IM

Samarinda

Mahakam River

Major city is less than 50 km

Adjacent locations for three mines

Close proximity transhipment

point & jetty Major City Jetty Transhipment Point

Furthest pit to jetty 25 km with closest 1 - 5 km Kutai Energy

The Company is currently engaged in coal production and sales through three subsidiary entities. These three subsidiary entities have adjacent concession areas located in Sanga-Sanga, Loa Janan and Muara Jawa, Kutai Kartanegara Regency, in the province of East Kalimantan. The ABN and Indomining concession areas are situated within 5 kilometers of their respective self-owned jetties on the Mahakam River delta, which provide access to transhipment points in Muara Jawa and Muara Berau. The Company’s concession areas total approximately 7,087 hectares.

~55 km (Total ~120 km)

Makasar Strait

Muara Berau

Coal Production (in million ton)

3.9

5.2 5.6

6.5

Concession Area

TM Ash TS Caloriic Value (kcl/kg)

(% GAR) (% GAD) (% GAD) GAR GAD

PT ADIMITRA BARATAMA NUSANTARA

ABN 52 25 7 0.8 5,200 5,800

ABN 55 - HS 20 6 1.8 5,500 6,000

ABN 55 - RS 20 6 0.8 5,500 6,000

ABN 58 19 6 0.9 5,800 6,250

PT INDOMINING

Indomining 19 8 0.9 5,700 6,200

PT TRISENSA MINERAL UTAMA

Trisensa - 47 28 5 0.4 4,700 5,400

Coal Products

Coal Resevers

147

million ton

Coal Resources

236

million ton

Based on the JORC Reports, the Company’s coal reserves are estimated to be 147 million tons and the Company’s coal resources are estimated to be 236 million tons. The reserves and resources in the Company’s concession areas include various grades of thermal coal. The caloriic values of the coal produced by the operating subsidiaries range from 4,700 GAR to 5,800 GAR. Currently, the majority of the Company’s coal is sold to coal trading companies, which primarily supply the coal to power generating companies in South Korea, Taiwan, China and India.

Business Strategy

Sustainable

Long Term

Growth

The Company’s business strategy in maintaining sustainable growth rests upon the coal mining concession locations of the three operating subsidiaries that are adjacent to one another. This allows the Company to undertake a collective mine planning on a group-wide basis that integrates the mining operations of ABN, IM and TMU. Through this integration strategy, there are many beneits that accrue to the Company and the Group, such as joint infrastructure development, the construction of hauling road that cuts through one of the subsidiary entity concessions, in addition to cost efficiency that can be derived from an integrated operation.

To that end, the Company has formulated ive strategic steps to support sustainable long term growth, as follows:

Integration of three mines.

Continue to focus on health and safety, environmental track record and commitment

to Corporate Social Responsibility.

Organically increase coal production levels. Increase coal reserve

and resource.

Stregthen existing and develop new customer

Vision

• Creating sustainable shareholder value from Indonesian mining

• Developing a best-in-class pool of talent

• Investing in our subsidiaries and other related businesses that will enhance value to shareholders

• Managing competitiveness of mining operations effectively

• Enhancing integration of coal supply chain to ensure reliability and efficiency

• Building strong relationship with our business partners and the inancial community

• Being a responsible corporate citizen in promoting community development and implementing good corporate governance practices.

Mission

Vision and Mission

To be one of the best-managed world class mining companies in

Indonesia with a focus on high growth by building competence through development of our employees, robust inancial performance, and solid returns

Organisation Structure

Board of Commissioners

Board of Directors

Legal Unit Corporate Secretary

Investor Relations

ABN BOD IM BOD TMU BOD

Audit Committee

Internal Audit

Finance & Accounting

Tries Nainggolan

Government Relations

Vacant

Proiles of the Board of Commissioners

1 2

Company Proile •Proiles of the Board of Commissioners

Mr. Jusman Syaii Djamal has been President Commissioner of the company since October 1, 2010. Currently he also serves as the President Commissioner of PT Cardig Aero Services Tbk (July 2011 – present), President Commissioner of PT Telkom Indonesia Tbk (January 2011 – present), Member of National Innovation Committee (May 2010 – present), Chairman of the Advisory Council of Entrepreneur of Land Transportation Organization (January 2010 – present), and Chairman of Matsushita Gobel Foundation January 2005 – present). Previously, he served, among others, as the Minister of Transportation of the First United Indonesia Cabinet (May 2007 – October 2009), Member of the National Evaluation Team of Transportation Safety and Security (January - May 2007), Member of Incubator Technology of BPPT (2003), and Chief Project Engineer of 50 seaters Advanced Turboprop N250 Fly by Wire Airplane, IPTN Indonesia (1990 – 1995). He graduated with a Bachelors Degree in Technical Aviation from Institut Teknologi Bandung.

Jusman S. Djamal

President Commissioner

1

Mr. Bacelius Ruru has been a Commissioner of the Company since March 30, 2012. Currently he also serves as Independent Commissioner of PT Manulife Aset Manajemen Indonesia (2011 – present), Independent Commissioner of PT Agung Podomoro Land Tbk (2010 – present), President Commissioner of PT Axle Asia (insurance broker) (2008 – present), President Commissioner of PT Jababeka Tbk (2007 – present), President Commissioner of PT Tuban Petrochemical Industries (2003 – present) and President Commissioner of PT Polychem Indonesia (2003 – present). Previously, he served, among others, as President Commissioner of PT Perusahaan Pengelola Aset (Persero) (2004 – 2008), President Commissioner of PT Telekomunikasi Indonesia Tbk (2001 – 2004), President Commissioner of PT Bursa Efek Indonesia (2001 – 2008), Secretary of the Ministry of State-Owned Enterprises (2001 – 2004), Deputy of State Minister/Deputy of Head of Investment and State-Owned Enterprises Development, Division of Supervision and Control, Ministry of State-Owned Enterprise (2000 – 2001), Assistant of Minister/Deputy of Mining Business and Agro Industry, State Ministry of Utilization (1999 – 2000), Deputy of Competitive Business Sector, Management Board of State-Owned Enterprises (1998 – 1999), Director General of State-Owned Enterprises

Mr. Farid Harianto has been a Commissioner of the Company since 2011. Currently he also serves as a Member of the President’s Advancement Advisory Council in the National University of Singapore (2011 – present), Independent Commissioner of PT BATA Indonesia Tbk (2011 – present), He is Special Staff of the Vice President of the Republic of Indonesia (2009 – present), Risk Oversight Committee of PT Bank International Indonesia Tbk (2007 – present), Independent Commissioner of PT Unggul Indah Cahaya Tbk (2005 – present), Independent Commissioner of PT Lippo Karawaci Tbk (2004 – present), and Member of Asian Executive Advisory Board, the Wharton School, University of Pennsylvania (2000 – present).

Previously, he served, among others, as Deputy Chairman of the Indonesian Bank Restructuring Agency (1998 – 2000), President Director of PT Pemeringkat Efek Indonesia (1995 – 1998), Visiting Professor and Chairman, ASEAN Studies, University of Toronto, Canada (1993 – 1995), and Director, Graduate Programs, Institute PPM (1990 – 1993). He graduated with a Bachelors Degree in Electrical Engineering from Institut Teknologi Bandung, Indonesia. He also holds a Masters in Applied Economics and Managerial Science

Bacelius Ruru

Independent Commissioner

Proiles of the Board of Directors

1 2

3

Ms. Justarina Sinta Marisi Naiborhu has been the President Director of the Company since May 5, 2011. Prior to this she was the President Director of PT CIMB-Principal Asset Management (2008 – 2011), Director of PT CIMB-GK Securities Indonesia (2003 – 2008), Vice President of Institutional Business & Advisory PT Kuo Capital Raharja (2001 – 2003), Portfolio Manager of Institutional Asset Management of PT Danareksa Investment Management (1999 – 2001), and Research & Development Analyst and Assistant to the President Director of PT Bursa Efek Jakarta (1992 – 1997).

She graduated with a Bachelors Degree from the Bogor Institute of Agriculture, Indonesia. She also holds a Masters Degree in International Securities, Investment and Banking from Reading University, United Kingdom and a Masters Degree in Management from the University of Indonesia, Indonesia.

Mr. Arthur Mangaratua Ebenhaezer Simatupang has been a Director of the Company since May 5, 2011. Prior to this, he was a Director and Chief Financial Officer of ABN since 2007. Additionally, he previously served as Advertising and Promotion Supervisor at PT Indofood Sukses Makmur Tbk (1998 -2004). He graduated with a Bachelors Degree in International Business from Seattle University, United States and a Masters of Commerce Degree in Finance and Accounting from The University of Sydney, Australia.

Mr. Pandu Patria Syahrir has been a Director of the Company since October 1, 2010. Prior to this, he was a Senior Analyst focusing on the energy and mining sectors at Matlin Patterson from 2007. Additionally, he previously served as Principal at Byun & Co., an Asian alternative energy fund (2002 – 2005) and as an Analyst at Lehman Brothers (2001 – 2002). He graduated with a Bachelors Degree from the University of Chicago, United States and holds a Masters of Business Administration Degree from the Stanford Graduate School of Business, United States.

Justarina S. M. Naiborhu

President Director/ Unafiliated Director

1

3

Arthur M. E. Simatupang

Director

Mr. Sudharmono Saragih has been a Director of the Company since June 20, 2012. Prior to this, he was the Company’s General Manager of Operations since April 2012. He previously served as a Project Manager at PT Toba Sejahtra (2011 – 2012). Prior to that, he was the Site Manager of PT Raja Kutai Baru Makmur, Ancora Group (2010 – 2011), Operations Manager of PT Karya Wijaya Aneka Mineral, Harita Group (2009 – 2010), Site General Manager of PT Agrabudi Jasa Bersama, Titan Mining Indonesia Group (2009), Operations General Manager of PT Riau Bara Harum, Andaru Resources Group (2008 – 2009), and Production Superintendent at PT Kaltim Prima Coal (2004 – 2005).

Sudharmono Saragih

Director

4

Pandu P. Syahrir

Director

2

In 2013, the Company added a total of 27 personnel, an increase of 1.1%, bringing the total number of employees in the Company and the three subsidiary entities to 795 people. As a growing organisation the Company sees human capital as a critical factor to achieving sustainable long-term growth. As such, the Company places a great emphasis on recruiting, training and retaining professionals and top talents in the coal mining industry.

In 2013 the Company sharpenned the Key Performance Indicator (KPI) in the three subsidiary entities. This is aimed at enhancing the performance of each subsidiary entity in a more measured and sustained manner.

In addition, the Company continues to develop its strategic human capital policy, including identifying skills and capabilities, setting remuneration standards, establishing career path programs, and devising new method of performance evaluation for the Company and its three subsidiary entities.

Human Resources

As of 31 December 2013 the Company and its subsidiary entities employ a total of 795 people, 702 of which are permanent employees. A total of 28 employees worked at Head Office in Jakarta with the remaining employees assigned in ield offices and sites working in various capacities that include administration, technical services, supervision of coal processing and barging, logistics, safety and health, the environment and community development.

Total Employees

2011

731

2013

795

786

The Company has a relatively young human resources composition, in which the largest group of employees are between the ages 26 years to 35 years. This youthful composition provides dynamism to the Company and its three operating subsidiaries. One of the enduring features of the Group’s human capital is their ‘can do’ spirit that underlines the work ethics of the Toba Bara business group. This fact plays a key role in the ability of the Company to increase its coal production consistently over the past four years.

The Company also places a strong emphasis on the value of training and education in human resources development. As a relatively young coal mining company, in 2012 the Company carried out intensive training program, attended by employees of various seniority levels. The list of training program is presented below:

No Training Organiser Date Location

1 First Aid Injury HSE ABN 18 January Sangasanga

2 Environmental Awareness HSE ABN 26 January Sangasanga

3 In-house Training Fatigue Management Indomining (Team HSE) 6 February Sangasanga

4 First Operational Supervisor Distamben Propinsi Kalimantan Timur 6-10 February Balikpapan 5 First Operational Supervisor Distamben Provinsi Kalimantan Timur 13 - 17 February Sangasanga

6 In-house Training Fatigue Management Indomining (Team HSE) 14 February Sangasanga

7 Leadership Course for New Managers QB Leadership Center 15 - 16 February Jakarta

8 In-house Training Fatigue Management Indomining (Team HSE) 16 February Sangasanga

9 In-house Training Fatigue Management Indomining (Team HSE) 18 February Sangasanga

Training Programs in 2013

As a growing organisation

the Company sees human

capital as a critical factor to

achieving sustainable long

term growth.

“

“

Company Proile •Human Resources

No Training Organiser Date Location

11 In-house Training Fatigue Management Indomining (Team HSE) 25 February Sangasanga

12 Root Cause Analysis Indotrain 9 - 10 March Sangasanga

13 Workshop National Security Indonesian Management Centre (IMAC) 15 - 16 March Balikpapan 14 Seminar Geotechnical Engineering in The Mining

Industry Workshop Balinga Utama 19 - 21 March Yogyakarta

15 Incident Investigation & Reporting Indomining (Team HSE) 20 March Sangasanga

16

Designing Salary Structure & Remuneration to Enhance Company’s Productivity with Ergonomy and Psychology Approach

Expertindo 25 - 27 March Yogyakarta

17 Environment Management Mairodi Mandiri Sejahtera 8 - 11 April Bandung

18 Awareness Oil Spillage HSE ABN 14 April Sangasanga

19 Coal Washing Plant & Stockpile Management Course PT Geoservices 15 - 16 April Bandung

20 Oil Spillage dan Penggunaan APAR HSE ABN 20 April Sangasanga

21 Certifate Industrial Relations Profesional Unika Atmajaya 24 - 27 April Balikpapan

22 Safety Leadership Team Safety Indomining 1 May Sangasanga

23 Safety Officer Technos Prima 6 - 8 May Sangasanga

24 Middle Operational Supervisor Pusdiklat Mineral & Batubara 13 - 19 May Bandung 25 Environmental Protection Expert on Safety, Health

at Work PT Phitagoras Global Duta 13 - 25 May Jakarta

26 How to Develop and Implement ISO 14001 Cipta Energi Utama Mandiri 15 - 19 May Sangasanga 27 How to Develop and Implement ISO 14001 PT Cipta Energi Utama Mandiri 16 - 19 May Bandung

28 P3K/First Aid Indonesian Red Cross 17 - 18 May Sangasanga

29 Education and Training on Mining Environmental

Management Pusdiklat Minerba 20 - 25 May Bandung

30 Professional Filing & Record Management Cipta Energi Utama Mandiri 27 - 31 May Sangasanga 31 Mine Indonesia 2013 11th Annual Review of trend in

the Indonesia Mining Industry

Pricewaterhouse Coopers Indonesia

(PwC Indonesia) 29 - 30 May Jakarta

32 Welder Indotrain 29 May - 30 June Sangasanga

33 Train of Trainer Indotrain 30 May - 1 June Sangasanga

34 Safety Officer Technos Prima 9 - 11 June Sangasanga

35 Intergrating QHSE Management System PT PGD 10 - 14 June Sangasanga

No Training Organiser Date Location

36 Training for Main Supervisor in Mining Pusdiklat Minerba 17 - 20 June Jakarta

37 Training and Competence Testing for Building/ Construction

Asosiasi Tenaga Ahli Kontruksi Indonesia

(ATAKI) 17 - 18 June Samarinda

38 Training and Competence Testing for Main

Supervisor in Mining Pusdiklat-Minerba Bandung 17 - 21 June Jakarta

39 In-house Training for Training XPAC PT Admitra Baratama Nusantara 24 - 28 June Sangasanga

40 LOTO HSE ABN 27 June Sangasanga

41 Domestic Waste Management HSE ABN 29 June Sangasanga

42 Candidate for Health and Safety at Work Expert in

2013 Distamben Provinsi Kalimantan Timur 1 - 4 July Sangasanga

43 Training for Candidate for Health and Safety at Work

Expert in 2013 Disnaker Provinsi Kalimantan Timur 2 - 5 July Samarinda

44 In-house Training Clean and Healthy Lifestyle Bio Medika 27 July Sangasanga

45 Health & Safety Management System Gilbert Markus Nisah Pih 14 September Sangasanga

46 Lead Auditor OHSAS 18001 & ISO 14001 Indotrain 21 - 20 September Sangasanga

47 Electricity Use at the Office and Mess HSE ABN 9 October Sangasanga

48 Awareness ASMK3L HSE ABN 11 - 12 October Sangasanga

49 Lead Auditor OHSAS 18001 & ISO 14001 Indotrain 17 - 18 October Sangasanga

50 Minescape Advance Stratmodel Mitrais 16 - 19 October Jakarta

51 Awareness ASMK3L HSE ABN 19 - 20 October Sangasanga

52 Evaluation & Certiication of General Safety and

Health Expert Start Safety 25 - 26 October Sangasanga

53 Mining Acid PT BENEFITA 26 - 30 October Sangasanga

54

Environmental Brainstorming “Basic Knowledge on Post-Mining Revegetation and Safety Management System"

Sri Soegiharto 31 October Sangasanga

55 Awareness Training ASMK3L HSE ABN 3 November Sangasanga

56 HIRADC & Identiikasi Aspek HSE ABN 9 November Sangasanga

57 Minescape Open Cut Public Mitrais 10 - 14 November Jakarta

58 Intensive Course on Mining Law EMLI Training 12 - 14 November Jakarta

59 Lead Auditor ISO 14001 Ceriication Indotrain 12 - 16 November Sangasanga

60 Workshop on Implementation of Inventory Data Application

Pusat Pengelolaan Ecoregion (PPE

Kalimantan) 20 November Balikpapan

61 Training on Analysis Need and Impact Evaluation PT ISDM 5 - 6 Desember Jakarta

62 Accident Investigation Expertindo 25 - 28 December Sangasanga

Company Proile •Human Resources

Employees Composition 2012-2013

2012

2013

Employees by Status

STATUS _Permanent

613 (77.9%) Temporary 173 (22.1%)

Permanent 702 (88.3%) Temporary 93 (11.7%)

Employees by Education

Senior High School 555 (70.6%) Junior High School 12 (1.5%) Elementary School 12 (1.5%)

Diploma 46 (5.8%) Bachelor’s and Master’s Degree 161 (20.6%)

Senior High School 553 (69.5%) Junior High School 14 (1.8%) Elementary School 13 (1.6%)

Diploma 51 (6.4%) Bachelor’s and Master’s Degree 164 (20.7%)

Male 712 (90.6%) Female 74 (9.4%)

Male 703 (88.4%) Female 92 (11.6%) Employees

by Gender

Age 18-25 86 (10.9%) Age 26-35 342 (43.5%) Age 36-45 241 (30.7%)

Age 18-25 76 (9.5%) Age 26-35 355 (44.7%) Age 36-45 261 (32.8%)

Employees by TItle

2012

2013

Non-Staff 427 (54.3%) Staff 165 (20.9%) Supervisor 114 (14.5%) Super Intendent 33 (4.2%) Manager 25 (3.3%) Senior Manager 4 (0.5%) General Manager 6 (0.8%) Director 12 (1.5%)

Non-Staff 465 (58.5%) Staff 108 (13.7%) Supervisor 132 (16.6%) Super Intendent 44 (5.5%) Manager 29 (3.6%) Senior Manager 1 (0.1%) General Manager 6 (0.7%) Director 10 (1.3%)

“

One of the enduring features of the

“

Group’s human capital is their ‘can do’

spirit that underlines the work ethics

of the Toba Bara business group.

Shareholders Information

Name Position Number of Shares Percentage

Jusman D. Djamal President Commissioner 0 0.0000000

Composition of Shareholders

Shareholders Owning More Than 5%

Report of Share Ownership - Directors & Commissioners per 31 December 2013

Luhut Pandjaitan

99.98%

PT Bara Makmur Abadi

(6.2%)

PT Sinergi Sukses Utama

(5.1%)

Public

(12.5%)

Davit T. Pandjaitan

(0.8%)

PT Toba Sejahtra

(71.8%)

Roby Budi Prakoso

(3.6%)

Name of Shareholders Numbers of Shares Share Ownership

PT Bara Makmur Abadi 125,755,000 6.25%

Bintang Bara B.V 201,250,000 10.00%

PT Sinergi Sukses Utama 102,700,000 5.10%

PT Toba Sejahtra 1,444,750,000 71.79%

PT Adimitra Baratama Nusantara

51.00%

PT Toba Bumi Energi

99.99%

PT Indomining

99.99%

PT Trisensa Mineral Utama

99.99%

PT Perkebunan Kaltim Utama I

Company Proile •Shareholders Information

Information on the Majority Controlling Shareholder

The Company is majority held by PT Toba Sejahtra (TS), which holds 71.8% shares of the Company. Mr. Luhut Pandjaitan holds 99.98% shares of Toba Sejahtra.

PT Toba Sejahtra is a limited liability company incorporated under Indonesian law on 6 August 2004, and is currently engaged in the business of mining, energy and plantation. The businesses of Toba Sejahtra comprise of among other things natural resources (thermal coal and oil and gas), power generating plants (as Independent Power Producer of coal- ired, gas-ired and geothermal power plants), as well as agricultural and plantation resources (oil palm, rubber, sugar cane, and forestry). In addition to Toba Sejahtra itself, the TS Group currently comprises of 16 other affiliated companies that are engaged in broad ranging industry sectors.

Toba Sejahtra works with several leading companies from Indonesia and overseas in developing various assets and natural resources in Indonesia, with the aim of harnessing the natural resources of Indonesia to their full capacity for the beneit of the Indonesian people.

Chronology of Share Listing

The Company successfully listed its shares on the Indonesia Stock Exchange on 6 July 2012, under challenging conditions for the coal market in general. A total of 210,681,000 common shares at a nominal value of Rp200 per share, was listed on the Exchange, representing 10.47% of the Company’s fully paid and subscribed capital. The number of shares that was offered to the public at a price of Rp1,900 per share generated an IPO proceed of Rp400,293,900,000 for the Company. It is listed on IDX with the ticker code of TOBA.

No. Type of Public Offering Effective Date

Realization of Public Offering Plan of Use of Proceeds as Disclosed in Prospectus Realization of Use of Proceeds as Disclosed in Prospectus

Total Proceeds from Public Offering Expenses of Public Offering Net Proceeds Payment of Loan to BNP Paribas Capital Expenditures Acquisition of Coal Mining Concession, Working Capital and Operational, and Exploration Activities Total Payment of Loan to BNP Paribas Capital Expenditures Acquisition of Coal Mining Concession, Working Capital and Operational, and Exploration Activities Total Remaining Proceeds of IPO

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1

Penawaran Umum

( IPO ) 6-Jul-12 400,294 38,871 361,423 94,476 189,711 77,236 361,423 94,116 112,532 77,236 283,884 77,539 Total 400,294 38,871 361,423 94,476 189,711 77,236 361,423 94,116 112,532 77,236 283,884 77,539

Report of Use of Proceeds Per December 2013

Notes

a. (i) Plan of use of proceeds as disclosed in Prospectus.

7 More or less 26.14% from the net proceeds to be used to repay loan facilities from BNP Paribas.

8 More or less 52.49% from the net proceeds to be used for capital expenditure to support mining activities, infrastructure and facilities development in the concession areas of the subsidiary entities.

9 More or less 21.37% from the net proceeds to be used as working capital for the Company and subsidiary entities and to inance exploration activities in the subsidiary entitities’ concession areas and to acquire coal mining concessions. (ii) Realisation of use of proceeds as disclosed in Prospectus.

11 Repayment of the loan principal to BNP Paribas amounting to US$9,946,782.69 equivalent to Rp94,116 million.

12 Capital expenditures related to the procurement of ixed assets for the Company and the development of supporting facilities in the concession areas of subsidiary entities.

13 Financing of working capital and exploration activities in the three subsidiary entities’ concession through loans extended to the subsidiary entities amounting to Rp18,485 million. Financing of operations and working capital of the Company

PT ADIMITRA BARATAMA NUSANTARA

Percentage Ownership of the Company

51.00%

PT INDOMINING

99.99%

PT Adimitra Baratama Nusantara (ABN) is a fast-growing

thermal coal producer located in Sanga- Sanga, Kutai Kartanegara, East Kalimantan, Indonesia and covers 2,990 hectares. First set up in 2004, ABN has been a majority-owned subsidiary entity of the Company since 2010.

ABN has a total estimated resources of 156 million tons of coal. Currently, ABN produces two varieties of blended thermal coal, ABN 52 and ABN 58. In 2013 it produced 4.2 million tons of coal, with main infrastructures that comprise of coal stockpile, crusher, overland conveyor and jetty. In 2013, more than 80% of ABN production is estimated to be higher than 5,600 GAR. ABN transports its coal from the ROM stockpile through the overland conveyor of less than ive kilometers, which directly loads the coal to 300-feet barges at the jetty.

PT Indomining is a subsidiary company of PT Toba Bumi Energi, which is wholly controlled by the Company. The Indomining coal concession is located in Sanga-Sanga, Kutai Kartanegara, East Kalimantan, and covers 683 hectares, adjacent to the concession of ABN.

IM has a total estimated coal resources amounting to 37 million tons, and has its own coal mining infrastructures that include a crusher, land conveyor and jetty. IM can transport crushed coal from the ROM stockpile through the overland conveyor directly onto docked barges in the jetty. IM began production in 2007 and in 2013 produced a total of 1.4 million tons of coal.

Brief Description of Operating Subsidiaries

Percentage Ownership of the Company

Board of Commissioners

Directors Directors

Paulina Maria Dame Uli Pandjaitan President Commissioner

Imelda The Commissioner

Aurelia Marsaulina Simatupang Commissioner Soenggoel Pardamean Sitorus Commissioner

Sintong Pandjaitan Commissioner

Johny Lumintang* President Director

Sudirdjo Widjaja Director

Board of Commissioners

Godlief Manangkak Timbul Silaen President Commissioner

Hamid Awaluddin Commissioner

Roby Budi Prakoso Commissioner

Saswinadi Sasmojo Commissioner

HM Yunus Yosiah Commissioner

Arthur Simatupang President Director

PT TRISENSA MINERAL UTAMA

PT PERKEBUNAN KALTIM UTAMA I

99.99%

90%

PT Trisensa Mineral Utama (TMU) is a wholly owned (99.99%) subsidiary of the Company. The TMU concession is located in Kutai Kartanegara, East Kalimantan, and covers 3,414 hectares. Trisensa has completed the construction of a coal-hauling road to IM through ABN in order to use IM’s infrastructures.

TMU has an estimated total resources of 43 million tons. TMU commenced production in October 2011, and in 2013 produced approximately 925 thousands tons of coal.

PT Perkebunan Kaltim Utama I (PKU) is a subsidiary entity of the Company with a majority share (90%) of PKU, which is engaged in the oil palm plantation business. PKU holds the Rights to Cultivate Oil Palm Plantation (HGU) of a site totalling 8,633 hectares in the Teluk Dalam Bario, Pula Seribu Village, Muara Jasa District, Jawa County, Sanga-Sanga Regency, and in Tani Bhakti Village, Batuah, Loa Janan District, Kutai Kartanegara Regency, East Kalimantan for a period of 30 years.

Percentage Ownership of the Company

Percentage Ownership of the Company

Company Proile •Brief Description of Operating Subsidiaries

Directors Directors

Board of Commissioners

Tjokro Saputrajaya President Commissioner

Bok Maria Laurensia Commissioner

Utomo Santoso Commissioner

Suadi Atma Commissioner

Salikin Moenits Commissioner

Eddy Kustiwa Koesma Commissioner

Suaidi Marasabessy President Director

Elim Khiat Director

Hartanto Saputrajaya Nyoto Director

Board of Commissioners

Luti Ibrahim Nasution President Commissioner

Luti Ismail Commissioner

No. Supporting

Institutions Name of Institutions Address Period

1 Public Accountant KAP Purwantono, Suherman & Surja

Gedung Bursa Efek Indonesia, Tower 2, 7th loor Jl. Jend. Sudiman Kav. 52-53, Jakarta 12190

T: (021) 5289 5000 F: (021) 5289 4100

2012 - 2013

2 Notary Aryanti Artisari, SH. M. Kn

Menara Sudirman, 18th loor Jl. Jend. Sudirman Kav. 60

Jakarta 12190 T: (021) 520 4778 F: (021) 520 4780

-2 Share Registrar PT Datindo Entrycom

Wisma Diners Club Amex Jl. Jend. Sudirman Kav. 34-35

Jakarta 10220 T: (021) 570 8870 F: (021) 570 9026

-3 Public Appraisal Firm Jennywati, Kusnanto & Rekan

Plaza Bapindo Citibank Tower, 27th loor Jl. Jend. Sudirman Kav. 54-55,

Jakarta 12190 T: (021) 526 0808 F: (021) 526 6006

OPERATING SUBSIDIARIES

PT ADIMITRA BARATAMA NUSANTARA

Jakarta Office

Wisma Bakrie 2, 11th loor Jl. H.R. Rasuna Said Kav. B-2 Jakarta 12920, Indonesia T: (021) 579 42103 F: (021) 579 42130

marketing@adimitra-baratama.co.id

Site

Jl. Habiba RT 04

Kelurahan Jawa, Sanga-Sanga 75254 Kab. Kutai Kartanegara - Samarinda Kalimantan Timur

Indonesia

T/F: (0541) 671 259

PT INDOMINING

Jakarta Office

Wisma Bakrie 2, 11th loor Jl. H.R. Rasuna Said Kav. B-2 Jakarta 12920, Indonesia T: (021) 579 30579 F: (021) 579 30580

Site

District 5, Jl. Gajah Mada

Kel. Sanga-Sanga Dalam, Kec. Sanga-Sanga Kab. Kutai Kartanegara - Samarinda

Kalimantan Timur Indonesia T: (0541) 671 387 F: (0541) 671 310

PT TRISENSA MINERAL UTAMA

Jakarta Office

Wisma Bakrie 2, 16th loor Jl. H.R. Rasuna Said Kav B-2 Jakarta 12920, Indonesia T: (021) 5793 0568/9 F: (021) 5793 0570

Site

KM 23 Desa Tani Harapan Kecamatan Loa Janan

Kab. Kutai Kartanegara - Samarinda Kalimantan Timur

Indonesia

T/F: (0541) 726 8231

PT PERKEBUNAN KALTIM UTAMA 1

Address of Company and Operating Subsidiaries

PT TOBA BARA SEJAHTRA Tbk

Wisma Bakrie 2, 16th loor Jl. H.R. Rasuna Said Kav. B-2 Jakarta 12920, Indonesia T: (021) 5794 5779 F: (021) 5794 5778 corsec@tobabara.com

Management Discussion

and Analysis

Industry Overview

Operational Review

Financial Review

56

58

The Coal Industry Sector Facing Declining Pace of Growth

The pace of growth in the demand for thermal coal continues to indicate a slowing trend. A number of energy policies that are directed towards lessening the dependency on coal energy resources - especially in the largest consuming country, China - have contributed to the changing landscape of the coal market over the past several years. Ten or even ive years ago, it would seem that the demand for cheap and readily available coal energy resources would never subside. New technology in power plants was developed speciically to be able to use thermal coal of low-range to medium-range caloriic value, enabling the consumption of much more coal. The process by which coal is produced and made available – from pit to port – was designed in the most effective and efficient manner for coal to be shipped to its destination quickly and reliably. Environmentally friendly technology was invented to reduce the amount of carbon emission from the burning of thermal coal.

But none of these initiatives were enough, it seems, to alleviate the pressure that continues to bear down on the coal industry. In the past several years, a number of initatives was pursued to reduce dependency on coal as an energy source – especially from the point of view of health and environmental considerations – and to rely more on other energy resources that are deemed more environmentally friendly or renewable.

China has a big opportunity to capitalise more on the technology to convert coal into synthetic gas or liqueied fuel. It is estimated

Whereas for other markets in Asia aside from China, India is expected to still rely on low-caloriic to medium-caloriic grade coal in growing volumes for the foreseeable future – but the problem for India is the steep devaluation of the Rupee against the US Dollar that has made the cost of coal imports prohibitively expensive for India.

These two developments in China and India have led to a decline in the market demand for coal that ultimately contributed to the market oversupply and depressed coal price. Throughout 2013, the average selling price of coal in accordance with the Newcastle Index Price was US$85.3 per ton, compared to US$96.9 per ton in 2012 and US$121.2 per ton in 2011.

The year 2013 was full of challenges for the coal-mining sector in Indonesia, as well as for the global coal industry in general. The lingering low global coal price index and an oversupply of the coal market in 2013 had forced most of the coal players in the world including Indonesia to cut operating costs, reduce workforce, and postpone major capital expenditures for large-scale developments. According to the International Energy Agency (IEA) in its Medium-Term Coal Market Report towards the end of 2013, “the global demand for coal will grow at an average rate of 2.3% per annum until 2018.” This estimate is lower than that of the previous year that predicted the average annual growth rate to be 2.6%, and far below the actual average annual growth rate between 2007 and 2012, which was 3.4%.

However, the IEA report also stated that despite the declining trend in the growth of global coal demand, coal will remain to be the primary source for the world’s growing energy consumption, more than the use of any other fossil fuel.

Industry Overview

Indonesia’s Coal Export Volume (in million tons)

Criteria Description Page

Description of internal Control System implemented by the Company

Description includes:

1. Financial and operational controlling, and submission to other laws and regulation and

2. Review of the effectiveness of the Internal Control System

-Risk management system implemented by company

Description includes:

1. Overview of the company’s risk management system 2. Type of risks and its management and

3. Review of the effectiveness of the risk management system

75

Signiicant cases involving the Company, or Public Company, subsidiaries, or incumbent members of the Board of Commissioners and/or Board of Directors

Description includes: 1. Subject of cases/claims 2. Settlement status of cases/claims 3. Effect on the company

-information regarding administrative sanctions imposed on issuers or public companies, members of the Board of Commissioners and the Board of Directors, by the capital market regulators and other authorities during the year

-Information regarding Corporate’s Code of Conduct and Culture (if any)

Description includes:

1. Content of the code of conduct 2. Content of corporate culture

3. Dissemination of the code of conduct and efforts to enforce the code

4. Disclosure that the code of conduct is applicable to the Board of Commissioners, Board of Directors and corporate’s employee

-Description regarding share ownership program by employee and/or management implemented by issuer or Public Companies, such as total, period, requirements of eligible employees/management, exercise price as well (if any)

-Description regarding whistleblowing system implemented in the Company to handle reports of misconduct or violation that could harm the Company or stakeholders (if any)

Description includes: 1. Method of reporting 2. Protection of the whistleblower 3. Handling of reports

4. Party that handles the reports 5. Outcome of the reports

-VII. Corporate Social Responsibility

Discussion regarding corporate social responsibility including policy, type of program, costs incurred

Description includes:

1. Environment, such as the use of materials and friendly environmental energy and could be recycle, company’s waste management system, certiicaion in environment, etc 2. Employment practice, occupational safety and health, such as

the equality of gender and work opportunity, facilities and safety, employee’s turnover rate, work incident rate, training, etc 3. Social and community development, such as the use of local

worker, community empowerment around companies, improvement of social infrastructure, other form of donations, etc and

4. Products responsiblity, such as consumer safety and health, products information, infrastructure, the amount and countermeasures of consumer’s complaints, etc

102-106

information referred to point (1) can be disclosed and submitted to Bapepam-LK in the annual Report or separate report such as sustainability Report or Corporate social Responsibility Report.

-Annual Report Contents Reference to the Bapepam-LK Regulation

2013 Annual Report

228

Criteria Description Page

VIII. Audited Consolidated Financial Statements

Annual Financial statements included in the Annual Report must be prepared in accordance with the accounting standards in indonesia that have been audited by an Accountant. Financial statements must include a statement regarding the responsibility for the Financial Statements as stipulated in the Regulation No. VIII.G.11 or Regulation No. X.E.1

Statement Letter from the Board of Directors regarding the Board of Directors’ responsibility to the Financial Statements

Compliance with Bapepam regulation-LK No.VIII.G.11 regarding the Board of Director’s Responsibility of the Financial Statements

112-113

Opinion of independent Auditor of Financial Statements

116-117

Description of Independent Auditor’s opinion

Description includes: 1. Name & signature 2. Audit report date

3. License number of the Public Accountant Firm and license number of the Public Accountant

116-117

Full Financial Statements

Includes all elements of the Financial Statements: 1. Balance sheet

2. Comprehensive income statement 3. Report on changes in equity 4. Cash low statement

5. Notes to the inancial statement

6. Financial position at the beginning of the comparative periods presented if the company implemented an accounting policy retrospectively or restated an account in the inancial statement, or if the company reclassiied inancial statement accounts (if relevant)

118-220

Disclosure in notes to the Financial Statement when the company applies an accounting policy retrospectively or restates an account in the inancial statement or reclassiies an account in the Financial Statement

State whether or not there is disclosure according to SFAS 131-154

Comparison of proitability ratio Comparison of proit (loss) in the current and previous years 121

Cash low report

Should fulill the following provisions:

1. Classiication of activities into three categories: operating, investing and inancing

2. Use of the direct method to report cash low from operating activities

3. Separate presentation of cash income and/or expenditure in the current year from operating, investing and inancing activities 4. Disclosure of non-cash activities in the notes to the inancial

statement

124-125

Summary of accounting policy

Includes at least the following: 1. Statement of compliance with SFAS

2. Basis of measurement and presentation of the inancial statement 3. Recognition of income and expense

4. Fixed assets 5. Financial instruments

131-154

Disclosure of related party transactions

Items that must be disclosed:

1. Name(s) of related parties, and nature of relationship with related parties

2. Value of transactions and percentage of total related income and expense

3. Balance and percentage of total assets or liabilities 4. Terms and conditions of related party transactions

202-205 Annual Report Contents Reference to the Bapepam-LK Regulation

Criteria Description Page

Disclosures related to Taxation

Items that must be disclosed:

1. Explanation of the relationship between tax expense (income) and accounting proit

2. Reconciliation between iscal and current tax assessment 3. Statement that the reconciled taxable proit is the basis for the

annual corporate income tax return

4. Breakdown of deferred tax assets and liabilities recognized in the balance sheet for each period presented, and total deferred tax expense (income) recognized in the income statement if such amount is not shown in the total deferred tax assets or liabilities recognized in the inancial statement

5. Disclosure of whether or not there are any tax disputes

178-182

Disclosure of Fixed Assets

Items that must be disclosed: 1. Depreciation method used

2. Explanation of whether fair value model or cost model have been adopted as accounting policy

3. Method and signiicant assumptions used in estimating the fair value of ixed assets (revaluation model) or disclosing the fair value of ixed assets (cost model)

4. Reconciliation of recorded gross amount and cumulative depreciation of ixed assets at the beginning and end of the period by showing addition, reduction and reclassiication

171-174

Recent developments in Financial Accounting standards and other Regulations

Description of FAS/regulations that have been issued but are not yet effective, which have not been applied by the company, stating: 1. Type and effective date of the new FAS/ regulations 2. Nature of the change that is not yet effective or the change in

accounting policy and

3. Effect of initial application of the new AS and regulations on the inancial statements

152-154

Disclosure related to the Financial Instrument

Items that must be disclosed:

1. Requirements, conditions and policies for each group of inancial instruments

2. Classiication of inancial instruments 3. Fair value of each group of inancial instruments

4. Explanation of the risks related to the inancial instruments: market risk, credit risk and liquidity risk

5. Purpose and policy on inancial risk management

147-152

Publication of the Financial Statements

Items to be disclosed include:

1. Date of authorization for the publication of the Financial Statements and

2. Party responsible for authorizing the inancial statements

113

IX. Signature of the Board of Commissioners and the Board of Directors

Signature of the Board of Commissioners and Board of Directors

1. Signatures of the Board of Commissioners and Board of Directors are on a separate sheet

2. Statement that the Board of Directors and Board of Commissioners are fully responsible to the truthfulness of the content of the Annual Report

3. Signed by all members of the Board of Commissioners and the Board of Directors by mentioning their names and positions 4. Written explanation in a separate letter from the concerned member

in the event of not signing the annual Report, or, written explanation in separate letter from other member in the event the concerned member did not provide written explanation

107 Annual Report Contents Reference to the Bapepam-LK Regulation

2013 Annual Report

230

PT TOBA BARA SEJAHTRA Tbk

Wisma Bakrie 2, 16th loor

Jl. H.R. Rasuna Said Kav. B-2 Jakarta 12920, Indonesia T: (021) 5794 5779 F: (021) 5794 5778 corsec@tobabara.com

Annual

Report